Press Release

Fulton Financial Reports Fourth Quarter and 2018 Results

Company Release - 1/15/2019 4:30 PM ET

LANCASTER, Pa.--(BUSINESS WIRE)--
Fulton Financial Corporation (NASDAQ:FULT) (the “Corporation”) reported
net income of $58.1 million, or $0.33 per diluted share, for the fourth
quarter of 2018, and net income of $208.4 million, or $1.18 per diluted
share, for 2018.

"Overall, 2018 was another good year for Fulton as we continued to
execute on our growth strategies and benefited from multiple interest
rate hikes from the Federal Reserve which translated into record levels
of revenue and earnings,” said E. Philip Wenger, Chairman and CEO. “I’m
extremely proud of our team’s hard work this year, and continued focus
on driving shareholder value. We look forward to 2019 and believe we are
well-positioned for an even better year.”

Net Interest Income and Margin

Net interest income for the fourth quarter of 2018 increased $2.8
million, or 1.8%, from the third quarter of 2018 and net interest margin
increased two basis points, to 3.44%. The average yield on
interest-earning assets and the average cost of interest-bearing
liabilities each increased nine basis points. The nine basis point
increase in the average yield on interest-earning assets was primarily
due to a ten basis point increase in loan yields. The nine basis point
increase in the average cost of interest-bearing liabilities reflected
an 11 basis point increase in the cost of interest-bearing deposits.

For the year ended December 31, 2018, net interest income increased
$55.1 million, or 9.6%, from 2017. Net interest margin increased 12
basis points, to 3.40%. The average yield on interest-earning assets
increased 29 basis points and the average cost of interest-bearing
liabilities increased 22 basis points from 2017.

Balance Sheet

Total average assets for the fourth quarter of 2018 were $20.5 billion,
an increase of $238.9 million from the third quarter of 2018. Average
loans, net of unearned income, increased $103.5 million, or 0.7%, in
comparison to the third quarter of 2018. Average loans and yields, by
type, for the fourth quarter of 2018 in comparison to the third quarter
of 2018 are summarized in the following table:

For the year ended December 31, 2018, average loans increased $578.7
million, or 3.8%, compared to 2017. Ending loans at December 31, 2018
increased $240.7 million, or 1.5%, compared to September 30, 2018 and
increased $397.6 million, or 2.5%, compared to December 31, 2017.

Total average liabilities increased $226.3 million, or 1.3%, from the
third quarter of 2018, while average deposits increased $445.8 million,
or 2.8%. Average deposits and interest rates, by type, for the fourth
quarter of 2018 in comparison to the third quarter of 2018 are
summarized in the following table:

Three Months Ended

December 31, 2018

September 30, 2018

Growth

Balance

Rate

Balance

Rate

$

%

(dollars in thousands)

Average Deposits, by type:

Noninterest-bearing demand

$

4,321,776

-

%

$

4,298,020

-

%

$

23,756

0.6

%

Interest-bearing demand

4,225,157

0.70

%

4,116,051

0.61

%

109,106

2.7

%

Savings and money market deposits

4,979,712

0.78

%

4,718,148

0.64

%

261,564

5.5

%

Total average demand and savings

13,526,645

0.50

%

13,132,219

0.42

%

394,426

3.0

%

Brokered deposits

164,280

2.34

%

162,467

2.05

%

1,813

1.1

%

Time deposits

2,722,141

1.46

%

2,672,548

1.34

%

49,593

1.9

%

Total Average Deposits

$

16,413,066

0.68

%

$

15,967,234

0.59

%

$

445,832

2.8

%

For the year ended December 31, 2018, average deposits increased $351.4
million, or 2.3%, compared to 2017. Ending deposits at December 31, 2018
increased $127.1 million, or 0.8%, compared to September 30, 2018 and
increased $578.6 million, or 3.7%, compared to December 31, 2017.

Asset Quality

Non-performing assets were $150.2 million, or 0.73% of total assets, at
December 31, 2018, compared to $130.8 million, or 0.64% of total assets,
at September 30, 2018 and $144.6 million, or 0.72% of total assets, at
December 31, 2017.

Annualized net charge-offs for the quarter ended December 31, 2018 were
0.17% of total average loans compared to 0.08% for the quarter ended
September 30, 2018. The allowance for credit losses as a percentage of
non-performing loans was 121% at December 31, 2018, as compared to 140%
at September 30, 2018 and 131% at December 31, 2017.

During the fourth quarter of 2018, the Corporation recorded an $8.2
million provision for credit losses, compared to a $1.6 million
provision for credit losses in the third quarter of 2018. For the year
ended December 31, 2018, the provision for credit losses was $46.9
million, an increase of $23.6 million from 2017.

The increases in non-performing loans and the provision for credit
losses during the fourth quarter of 2018 were primarily the result of a
single relationship, including commercial loans and leases.

Non-interest Income

Non-interest income in the fourth quarter of 2018, excluding investment
securities gains, decreased $1.5 million, or 2.9%, in comparison to the
third quarter of 2018. This decline was due primarily to decreases in
commercial loan interest rate swap fees and merchant fees. The decline
was partially offset by gains in investment management and trust
services income and small business administration (SBA) lending income.

For the year ended December 31, 2018, non-interest income, excluding
investment securities gains, decreased $3.4 million, or 1.7%, primarily
due to a $5.1 million net gain recognized upon the settlement of
litigation in 2017 and decreases in commercial loan interest rate swap
fees, overdraft fees, SBA lending income and mortgage banking income,
which included a $1.3 million mortgage servicing rights valuation
allowance reversal in 2017. Partially offsetting these decreases were
increases in investment management and trust services income, merchant
fees, and credit and debit card income.

Non-interest Expense

Non-interest expense increased $5.3 million, or 3.9%, in the fourth
quarter of 2018, compared to the third quarter of 2018. Amortization of
tax credit investments increased $4.9 million, due to the amortization
of a tax credit investment that generated a corresponding credit to
income taxes in the quarter. The $2.4 million increase in other
expenses, due primarily to branch consolidation costs and other real
estate owned expense, was partially offset by a decrease in marketing
expense.

For the year ended December 31, 2018, non-interest expense increased
$20.5 million, or 3.9%, compared to 2017. This increase was primarily
due to increases in salaries and employee benefits, other outside
services, data processing and software, net occupancy expense and
professional fees.

Income Tax Expense

The effective income tax rate for the fourth quarter of 2018 was 8.6%,
as compared to 11.5% for the third quarter of 2018. The decrease in the
effective income tax rate resulted mainly from the aforementioned tax
credit and lower income before income taxes.

The effective income tax rate for the year ended December 31, 2018 was
10.5% compared to 26.7% in 2017, due primarily to the new federal
corporate income tax rate, which became effective January 1, 2018.

Additional information on Fulton Financial Corporation is available on
the Internet at www.fult.com.

Safe Harbor Statement

This news release may contain forward-looking statements with respect to
the Corporation’s financial condition, results of operations and
business. Do not unduly rely on forward-looking statements.
Forward-looking statements can be identified by the use of words such as
"may," "should," "will," "could," "estimates," "predicts," "potential,"
"continue," "anticipates," "believes," "plans," "expects," "future,"
"intends," “projects,” the negative of these terms and other comparable
terminology. These forward looking statements may include projections
of, or guidance on, the Corporation’s future financial performance,
expected levels of future expenses, anticipated growth strategies,
descriptions of new business initiatives and anticipated trends in the
Corporation’s business or financial results.

Forward-looking statements are neither historical facts, nor assurance
of future performance. Instead, they are based on current beliefs,
expectations and assumptions regarding the future of the Corporation’s
business, future plans and strategies, projections, anticipated events
and trends, the economy and other future conditions. Because
forward-looking statements related to the future, they are subject to
inherent uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of the Corporation’s
control, and actual results and financial condition may differ
materially from those indicated in the forward-looking statements.
Therefore, you should not unduly rely on any of these forward-looking
statements. Any forward-looking statement is based only on information
currently available and speaks only as of the date when made. The
Corporation undertakes no obligation, other than as required by law, to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

A discussion of certain risks and uncertainties affecting the
Corporation, and some of the factors that could cause the Corporation's
actual results to differ materially from those described in the
forward-looking statements, can be found in the sections entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Corporation’s Annual Report
on Form 10-K for the year ended December 31, 2017 and Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018 and
September 30, 2018, which have been filed with the Securities and
Exchange Commission and are available in the Investor Relations section
of the Corporation's website (www.fult.com)
and on the Securities and Exchange Commission's website (www.sec.gov).

Non-GAAP Financial Measures

The Corporation uses certain non-GAAP financial measures in this
earnings release. These non-GAAP financial measures are reconciled to
the most comparable GAAP measures in tables at the end of this release.

FULTON FINANCIAL CORPORATION

SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

in thousands, except per-share data and percentages

Three Months Ended

Dec 31

Sep 30

Jun 30

Mar 31

Dec 31

2018

2018

2018

2018

2017

Ending Balances

Investments

$

2,686,973

$

2,635,413

$

2,593,283

$

2,592,823

$

2,547,956

Loans, net of unearned income

16,165,800

15,925,093

15,792,969

15,696,284

15,768,247

Total assets

20,682,152

20,364,810

20,172,539

19,948,941

20,036,905

Deposits

16,376,159

16,249,014

15,599,799

15,477,103

15,797,532

Shareholders' equity

2,247,573

2,283,014

2,245,785

2,235,493

2,229,857

Average Balances

Investments

$

2,646,266

$

2,596,414

$

2,601,705

$

2,556,986

$

2,566,337

Loans, net of unearned income

15,965,637

15,862,143

15,768,377

15,661,032

15,560,185

Total assets

20,512,130

20,273,232

20,063,375

19,876,093

20,072,579

Deposits

16,413,066

15,967,234

15,517,424

15,420,312

16,056,789

Shareholders' equity

2,281,669

2,269,093

2,246,904

2,224,615

2,237,031

Income Statement

Net interest income

$

162,944

$

160,127

$

156,067

$

151,318

$

149,413

Provision for credit losses

8,200

1,620

33,117

3,970

6,730

Non-interest income

49,523

51,033

49,094

45,875

56,956

Non-interest expense

140,685

135,413

133,345

136,661

138,452

Income before taxes

63,582

74,127

38,699

56,562

61,187

Net income

58,083

65,633

35,197

49,480

34,001

Pre-provision net revenue(1)

78,320

77,370

73,449

62,150

69,361

Per Share

Net income (basic)

$

0.33

$

0.37

$

0.20

$

0.28

$

0.19

Net income (diluted)

0.33

0.37

0.20

0.28

0.19

Cash dividends

0.16

0.12

0.12

0.12

0.14

Tangible common equity(1)

10.08

9.95

9.75

9.71

9.70

Weighted average shares (basic)

174,571

175,942

175,764

175,303

175,132

Weighted average shares (diluted)

175,473

177,128

176,844

176,568

176,374

Asset Quality

Net charge-offs to average loans (annualized)

0.17

%

0.08

%

1.01

%

0.10

%

0.14

%

Non-performing loans to total loans

0.86

%

0.75

%

0.78

%

0.86

%

0.85

%

Non-performing assets to total assets

0.73

%

0.64

%

0.67

%

0.73

%

0.72

%

Allowance for credit losses to loans outstanding

1.05

%

1.05

%

1.07

%

1.12

%

1.12

%

Allowance for loan losses to loans outstanding

0.99

%

0.99

%

0.99

%

1.04

%

1.08

%

Allowance for credit losses to non-performing loans

121.29

%

139.74

%

136.77

%

130.73

%

130.67

%

Allowance for loan losses to non-performing loans

114.93

%

131.40

%

126.11

%

121.22

%

126.08

%

Non-performing assets to tangible shareholders' equity

and allowance for credit losses(1)

7.97

%

6.81

%

7.16

%

7.73

%

7.71

%

Total delinquency rate

1.08

%

1.15

%

1.18

%

1.19

%

1.24

%

Profitability

Return on average assets

1.12

%

1.28

%

0.70

%

1.01

%

0.67

%

Return on average shareholders' equity

10.10

%

11.48

%

6.28

%

9.02

%

6.03

%

Return on average shareholders' equity (tangible)(1)

13.17

%

14.99

%

8.23

%

11.85

%

7.91

%

Net interest margin

3.44

%

3.42

%

3.39

%

3.35

%

3.29

%

Efficiency ratio(1)

62.2

%

62.5

%

63.3

%

67.5

%

64.2

%

Capital Ratios

Tangible common equity ratio(1)

8.52

%

8.83

%

8.73

%

8.78

%

8.71

%

Tier 1 leverage ratio(2)

8.92

%

9.34

%

9.20

%

9.20

%

8.93

%

Common equity Tier 1 capital ratio(2)

10.24

%

10.80

%

10.60

%

10.70

%

10.38

%

Tier 1 capital ratio(2)

10.24

%

10.80

%

10.60

%

10.70

%

10.38

%

Total risk-based capital ratio(2)

12.74

%

13.34

%

13.20

%

13.30

%

13.02

%

Financial information, as adjusted (3):

Net income

$

49,635

Net income per share, diluted

$

0.28

Return on average assets

0.98

%

Return on average shareholders' equity

8.80

%

Return on average shareholders' equity (tangible)

11.55

%

(1) Please refer to the calculation on the page titled
“Reconciliation of Non-GAAP Measures” at the end of this document.

(2) Regulatory capital ratios as of December 31, 2018 are
preliminary and prior periods are actual.

(3)Excluding the re-measurement of net deferred tax
assets of $15.6 million, which is considered a Non-GAAP financial
measure. Please refer to the calculation and management’s reasons
for using this measure on the page titled “Reconciliation of
Non-GAAP Measures" at the end of this document.